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Tax office retreats to old system

PROBLEMS surrounding installation of a new information system at Slovakia’s tax offices have been temporarily resolved as the acting director of the country’s Financial Administration, Mária Machová, told the media that the previously used RDS information system developed by the Novitech company will be re-instituted to stem the mounting problems caused by malfunctioning software installed earlier this year.

PROBLEMS surrounding installation of a new information system at Slovakia’s tax offices have been temporarily resolved as the acting director of the country’s Financial Administration, Mária Machová, told the media that the previously used RDS information system developed by the Novitech company will be re-instituted to stem the mounting problems caused by malfunctioning software installed earlier this year.

Machová presented her recommendation to an oversight committee created by parliament after reviewing the results of testing conducted by Novitech on March 27 to recheck the functionality of the older system. The test involved 2,148 users accessing the information system and 1,600 users simultaneously logged on at one point. According to the TASR newswire, 94 percent of employees reported that their work using the RDS system was satisfactory.

“The test results showed that there is a real alternative by using the IS RDS information system for tax administration,” said the Financial Administration’s spokesperson, Miroslava Slemenská, as quoted by TASR.

RDS was slated to become the main tax processing system again as of April 2 and is expected to be fully operational by April 18. The Financial Administration will pay Novitech €600,000 to re-launch the old system with Machová adding that the administration wants to incorporate the functional components of its new KONS system into RDS in coming months.

TASR wrote that the Slovak government will need to pay €2.7 million that it owes Novitech for services provided in 2011 as Novitech made payment of that past due amount a condition for allowing the state to start reusing its information system.

Former finance minister Ivan Mikloš has claimed that Novitech was one of the primary causes of problems with the new KONS information system, stating that Novitech had not provided the solutions necessary for implementation of the broader UNITAS project that seeks to unify collection of taxes, customs duties and payroll levies into a single system. Novitech responded that it had prepared the appropriate solutions but could not implement them because the government had not agreed to an extension of their original work contract, the SITA newswire wrote.

Using the RDS system is expected to be only a temporary solution as some experts consider it to be technically out-of-date and Machová told the Sme daily that her administration will continue trying to eliminate errors in the malfunctioning KONS system.

“I was surprised by the evaluation,” Machová stated when asked about the results of the tests of the KONS information system, explaining that the software developed by IBM company for UNITAS had several good functionalities such as electronic collection of data as well as its administrative section.

Further refinement of the tax office’s information system will now be in the hands of Finance Minister Peter Kažimír who took office on April 4. He said issues within the IT system cannot be solved immediately as there are several other problems in the Financial Administration that must first be dealt with.

“It is not only about IT systems but also about the atmosphere in that institution,” Kažimír stated, as quoted by TASR, adding that he will appoint several new people who will restore trust in the administration and its employees.

Kažimír also said he and the interior and justice ministers plan to prepare a legislative package focused on improving the state’s collection of taxes.

A malfunctioning system

The contract signed with Novitech to implement a new information system to handle the UNITAS project was terminated in January 2012 by Miroslav Mikulčík, the former head of what was called the Financial Operations Competence Centre that had overall responsibility for system software for UNITAS.

Mikulčík had also served as the head of the now-abolished Tax Directorate but was forced to resign his position by Prime Minister Iveta Radičová in April 2011 after controversy erupted over his decision to lease property for the tax office in Košice from a company owned by a regional official from the Slovak Democratic and Christian Union (SDKÚ) party. The new KONS information system was reportedly prepared by several software firms, including Bank Pro Soft, a firm that Sme reported had links to Mikulčík.

The KONS system was supposed to work as a temporary solution beginning on February 1 to bridge the gap between the old RDS software and new software prepared by IBM for UNITAS. But employees of the tax offices began complaining in early February that the KONS system was not functioning properly.

The Financial Administration’s director, Igor Krnáč, and Mikulčík were then sacked by Mikloš and Machová was moved from her position in the customs section to become acting director of the Financial Administration.

At that time Smer party called on President Ivan Gašparovič to also dismiss Mikloš as finance minister, stating that the minister had confirmed that the information system was dysfunctional and that the country’s tax offices were functioning in what Smer called a “stone-age mode”. Incoming Prime Minister Robert Fico, Smer’s chairman, said at the time that Mikloš “has failed both politically and professionally and cannot cowardly escape his responsibility by penalising a low-ranking bureaucrat”, as quoted by SITA.

But Gašparovič refused to dismiss Mikloš by saying that he did not view “replacing the finance minister with another member of the government several days before [parliamentary] elections to be a very good solution”, SITA reported.

On March 15 Mikloš told TASR that the persons primarily responsible for the IT debacle were Branislav Ďurajka, the managing director of the UNITAS project and the former state secretary (i.e. deputy minister) at the Finance Ministry, along with Krnáč and Mikulčík.
“That does not mean I want to rid myself of the responsibility for the state that the Financial Administration is in,” Mikloš added, as quoted by TASR.

Criminal complaint filed

The management changes at the Financial Administration in mid-February did not resolve the problems with the malfunctioning information system and employees at the tax offices said in March that they could not fully access electronic databases and had to manually perform some duties.

MP Jozef Kollár, who chaired an oversight committee established by parliament, told a press conference on February 29 that IBM’s sales manager had told him that the UNITAS project could not now be launched as of January 1, 2013 as planned.

The police department’s Office for the Fight Against Corruption has also begun a criminal investigation based on a complaint filed by Machová on March 12 after Slovakia’s Supreme Audit Office (NKÚ) confirmed to her that it believed Slovakia’s law on public administration had been violated, Sme wrote.

Concurrently, parliament’s finance committee requested IT experts from the Slovak University of Technology and Comenius University to evaluate all the information systems used within the Financial Administration.

Radičová told the media that similar problems could occur in other state institutions in the future if politicians did not change their approach to IT projects, saying that she believes problems begin when contracts are changed when a new government takes office.

“The whole problem starts with a fight between subcontractors,” Radičová stated, as quoted by SITA, adding that past governments have had their own preferred IT subcontractors.

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